In Mycobacterium tuberculosis, hspR is the last gene of the dnaKJE operon. It encodes the repressor HspR, which regulates the expression from this operon by binding to a consensus upstream sequence known as HAIR (HspR-associated inverted repeats). Previous investigations in the related Gram-positive bacterium Streptomyces coelicolor have revealed that DnaK acts as a co-repressor for HspR. In this investigation, a similar situation was encountered using the corresponding mycobacterial pair. However, the novel feature unearthed in this study is that the mycobacterial GroELs, GroEL1 and GroEL2, considerably stimulate the HAIR-binding activity of the HspR-DnaK combination. That these GroELs play a role in the folding process was evident from the observation that when heat- or chemically denatured HspR was renatured, the protein gained optimal activity only if one of these GroEL class chaperones was present along with DnaK. The renaturation process was found to be dependent on ATP hydrolysis. The DnaK-dependent DNA-binding activity of HspR could also be stimulated by DnaJ, but GrpE, which is known to release DnaK-bound substrates, was found to be inhibitory. The results of this study suggest that protein folding plays a substantial role in the activation of HspR following heat shock and that DnaK may be involved in two ways -- first, as a chaperone acting in concert with GroEL and/or DnaJ and second, as a co-repressor bound to HspR.